National Bank of Romania to leave monetary policy unchanged

NBR has reduced its benchmark rate by 350bps since Jan-2013 and has now reached a more neutral stance. The central Bank is expected to keep its policy rate on hold at 1.75% at today's meeting, says Commerzbank.

According to Commerzbank, "We do not expect inflation to accelerate anytime soon - we forecast inflation to rise back to its 2.5% target only later by H2 2016 - but, this has become a secondary factor as regional CenBank's have turned their attention to accelerating Eurozone core inflation; in Romania's case, a planned gas tariff hike in August will also boost headline CPI temporarily". 

For all these reasons, NBR is likely to take a step back and leave its policy rate unchanged at 1.75% for an extended period. 

"If regional disinflation were to return, however, the risk to the rate would be to the downside. On this rate view, we expect EUR-RON to remain stable over the coming quarters, moving mildly lower to 4.42 by end-2015", added Commerzbank.